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Why Should I Use a Living Trust?

A Living Trust can save money and avoid family issues. A Living Trust makes sense for most people. Those with highly valuable estates should definitely have one.

Jasper L. Edwards

 

A living trust is a legal document that partially substitutes a will, but with certain advantages. In the eyes of the law, it is considered a legal entity with the power to buy and sell assets.

With a living trust, some of your assets are placed into a trust that is administered for your benefit during your lifetime. These assets are then transferred to your beneficiaries once you pass on. They may include properties, stocks or bank accounts. 

Most people usually name themselves as the trustee in charge of managing their assets. However, you can appoint a successor trustee to oversee the trust’s assets if you are ever unable or unwilling to do so. 

The following are some of the main benefits of a living trust:

Avoids Probate

Probate refers to the legal procedure of distributing property after the death of an individual. During the process, assets are distributed amongst the beneficiaries and all claims are resolved. In most cases, there are huge attorney and court fees associated with taking a will through probate. In addition, the beneficiaries do not receive any proceeds until the probate court approves their distribution. This entire process can take quite a long time, ranging from a few months to several years. 

With a living trust, your beneficiaries can simply go to the bank and withdraw any proceeds left for them. They only need a copy of the trust, their identification papers and your death certificate. All this is done in accordance with the trusts’ agreement. In the case of a regular will, your beneficiaries cannot attempt to withdraw any money until the probate courts grants permission to the bank.

Offers protection against law suits

Lawsuit protection is usually offered to married couples whose assets are held between two trusts. For instance, a wife can be insulated from the acts of her husband. However, the living trust should be properly drafted for lawsuit protection to apply.

Sheltering your estate

With a living trust, you can shelter your entire estate or just a portion of it. However, you will need to conform to certain IRS tax codes. 

Helps to save money

Even though a regular will may cost less to draft, a living trust will save your estate money after your death. This is because distribution of assets will not go through probate. This means that you will not incur any court or attorney charges. 

A living trust is something that makes sense for most people. Those with highly valuable estates should definitely have one.

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